RR Nair to take over as LIC Housing Finance CEO

MV Ramsurya, TNNApr 29, 2008, 12.29am IST

MUMBAI: LIC Housing Finance, the listed subsidiary of LIC, will soon have a new CEO. RR Nair, currently director-training with LIC, has been asked to take over as the new head of India's third-largest housing finance company. Current CEO SK Mitter's three-year tenure is close to completion.

LIC Housing Finance is scheduled to make an announcement soon. When contacted, Mr Mitter said: "Yes, I've been transferred to LIC. This is part of LIC's deputational policy."

The move has surprised LIC Housing Finance investors, many of whom are large foreign institutional investors. "It affects the continuity of strategic decisions since two to three years is too short a time to execute major plans," said the head of a large FII.

This is not the first time that LIC has transferred its housing finance unit's CEO. The earlier CEO, AK Dasgupta, was transferred as managing director of LIC after he had completed a two-year tenure.

LIC, the parent company, has a 40.5% equity stake in LIC Housing Finance while foreign institutional investors own about 29.8%, necessitating key appointments to have a defined term.

The number of FIIs investing in LIC Housing has been growing steadily over the past two years, reflecting a growing investor interest in the company that has posed tough challenge to other large players such as HDFC and ICICI Bank.

The housing finance industry in the country has grown in the past five years as rising incomes have led people to borrow for buying homes. Although a tightening credit market globally has slowed home loan growth in the past quarter, till last year the segment grew at 28.1%. It has currently slowed to 21.6%.

Shares of LIC Housing Finance on Monday surged 11.6% to Rs 357.40 on the BSE. The company has improved financially. In the previous fiscal year, LIC Housing Finance posted a more-than-expected 39% rise in its net profit.

"Mr Mitter's appointment was made about three years ago and since then LIC Housing Finance has initiated several plans that are vital in this competitive industry," said a source familiar with the matter.

One of the prominent products recently launched by LIC Housing Finance is the reverse mortgage loan scheme for senior citizens above 60 years. The product has been seen by analysts as innovative, especially after mortgage defaults overseas made most housing loan providers jittery.

Sources said LIC's appointments in its subsidiary have been on an ad hoc basis. "Selected CEOs in peer companies are typically given a minimum term of five years during which various policies can be executed properly," said a senior executive with a consulting firm.